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Seven Days: 16 October 2020

A round-up of the biggest business stories of the past week
October 15, 2020 and Alex Hamer

J&J pauses vaccine trial

Participant falls ill

Johnson & Johnson (US:JNJ) has suspended its clinical trials for a Covid-19 vaccine, after a study participant fell ill. The company said that the person will be reviewed and evaluated by an independent board, as well as internal clinical and safety physicians. It has suspended recruitment to the Phase III trial as a precaution, although noted that with a trial so large it was not unusual for someone to become unwell. Last month UK group AstraZeneca (AZN) paused its trial after one participant developed an unexplained illness.

 

Apple’s new iPhone

5G enabled 

Apple (US:AAPL) has announced a new range of 5G-enabled iPhones, with a starting retail price of $829, or £699 in the UK. The stock had rallied 6 per cent in anticipation of the launch, although dipped 2.7 per cent on the day of the event. The new models have flat edges, marking a departure from the curved design of the iPhone X in 2017. The new handsets will not be available for pre-order until 3 November.  Apple’s manufacturing was disrupted earlier this year by coronavirus.

 

BHP confirms China import restrictions

Miner BHP (BHP) said it had been asked to defer shipments to China by clients. This comes after a potential ban on Australian coal imports, as reported by S&P Global Platts. BHP chairman Ken Mackenzie said there had been requests to stop shipments on the day of the dual-listed company’s Australian annual meeting. The miner relies on China for much of its earnings, through iron ore and coal exports from Australia. There was no indication iron ore buyers had called for a pause on contacts. In a prepared speech for the annual meeting, chief executive Mike Henry had spoken of China’s recovery spending as a driver for metals prices. 

Disney reshuffle

Streaming focus

Walt Disney (US:DIS) has reorganised its business so that it can focus on its streaming service Disney+, following reports of calls from activist investor Daniel Loeb to double down on its content production. The media titan said that it will focus on creating ‘direct-to-consumer’ content for Disney+,  as well as its legacy platforms. But the streaming service will be the primary focus of the content production business, which will now be separate from distribution. Disney+ has surpassed 60.5m global subscribers since its launch in late 2019. 

 

Unilever base moves from Netherlands

Shareholders back unification

Both sets of shareholders have now backed Unilever’s (ULVR) move to get rid of its 90-year-old dual-listing structure. Just under 100 per cent of London investors voted in favour, which holders of the Netherlands stock also supported. There is a risk that a private member’s bill in the Dutch parliament could attach an €11bn (£10bn) exit fee to the unification. Unilever said it was reviewing the fee possibility but has carried on, with the next step a court hearing in the UK on 23 October. 

 

IMF ups economic forecast

Warns of higher poverty 

The International Monetary Fund (IMF) has given a bleak outlook for the recovery from Covid-19 despite boosting its December quarter global economy growth forecast. The IMF said the world would see a 4.4 per cent overall economic contraction in 2020, down from its 5.2 per cent forecast made in June. Chief economist Gita Gopinath said the recovery would still leave an extra 90m people in extreme poverty than before Covid-19, while in the labour market “low-skilled workers, youth, and women” would be hardest hit. The 2021 growth forecast was trimmed to 5.2 per cent from the 5.4 per cent published in June. 

 

Kainos shares jump

Business booms

Kainos’ (KNOS) shares surged by more than a quarter this week, after it told the market that it expects revenue to materially beat current consensus in 2021. The company is the exclusive UK boutique partner of HR software platform Workday and has enjoyed a market-wide shift to remote working, as well as healthy trading within the public sector. While medium-term coronavirus risks remain, the group noted a robust pipeline and a sizeable contracted backlog. 

 

Corporate interest in green bonds surged in September, according to the Climate Bond Initiative (CBI). 

A green bond is a type of debt companies take on specifically to cut their environmental impact. 

In September, both Coca-Cola (US:KO) and Daimler (Ger:DAI) took on their first green bonds, worth $705m and $1bn respectively. The CBI said last month’s $32.2bn in new issuances was a record.